6 Jun 2024

Extreme sick leave scenarios 'rare', if they happen at all, employers' group says

1:17 pm on 6 June 2024
Deputy leader of ACT Brooke van Velden

Workplace Relations Minister Brooke van Velden declined to talk to Morning Report about the proposed changes. Photo: RNZ / Angus Dreaver

A high-profile backer of a proposed change to how sick leave is calculated has admitted an example it has been using of flaws in the current system would only apply in "rare" cases, if at all.

On Wednesday, Workplace Relations Minister Brooke van Velden announced plans to reduce the amount of sick leave for part-time workers. Presently they have the same minimum entitlements as full-time workers - 10 days a year.

Instead, van Velden wants it to be pro-rated, depending on how many hours a year people actually worked.

She said she had heard of one case where a person worked two jobs part time, so was entitled to 20 days' sick leave when most full-time workers were only entitled to 10.

"It would become proportional to the hours that you've been working, rather than having people entitled to more than a full-time worker."

She said the change would "help avoid the complex calculations that regularly stump payroll software and should therefore reduce compliance costs for employers".

Backers of the move include Business New Zealand and the Employment and Manufacturer's Association (EMA).

"The key issue with not pro-rating sick leave is that if you're working one day a week and something occurs in which you decide you may want to take sick leave, you can take 10 weeks' effective sick leave," Business NZ chief executive Kirk Hope told RNZ.

Alan McDonald, head of advocacy and strategy for the EMA, used the same example in an interview with RNZ's Morning Report on Thursday. The EMA also used the example in a press release on Wednesday.

"Just as an extreme example, if you work one day a week, there are about 45.5, 46 working weeks a year, you might work 46 days in a year and you'd get 10 days' sick leave - so would a person who works five days a week all year, so there's an imbalance there. It's always been there… pro rata is the right way to do it."

Asked how often that "extreme example" would occur, McDonald said: "It would be rare, if at all."

He said the Holidays Act was a "bit of a shambles, and it has been for a long time".

"Successive governments have promised to deal with it and it hasn't been dealt with, and that's why you've seen things like provision for $2.2 billion in back pay in the health sector, $1.2b in the education sector, the police have had a back pay. MBIE - that enforces the Holidays Act - had to pay its own staff back pay because it got it wrong."

"There's been a lot of work going on in the background. Our colleagues at Business New Zealand and the unions have been part of a tripartite group that was designing a previous scheme which has been sitting at a desk at MBIE for a while. They're still meeting, and so I'm hopeful that this time when they go to the very straightforward accrual model - which is the direction that the minister has flagged - that we'll be able to get it done quickly."

An accrual model would see employees earn sick leave in a similar way to they do annual leave - the more you work, the more you get. McDonald said it would also apply from day one, removing the current requirement to wait several months before an employee is eligible.

"For employers the… accrual model is kind of the holy grail in terms of getting things right, because there's been about 140 employers that have got it wrong so far, and there'll be a lot more. And so having a simple, easy calculation to follow that says you work X, you get Y, that's pretty easy to do for your payroll."

At present, the Holidays Act only refers to sick leave in terms of "days", not hours, like annual leave.

The law does not spell out what a day is in practical terms, when some part-time workers will be working full eight-hour days - just not five days a week, and others might be working five or more days a week, but in shorter stints at different jobs.

Van Velden declined Morning Report's request for an interview on the topic.

'Overwhelmingly women, young people and disabled people'

Rachel Mackintosh, acting president of the Council of Trade Unions (CTU) said the proposed changes would affect 500,000 New Zealanders "who are overwhelmingly women, young people and disabled people".

"Those are the people who work part-time. What this proposal is, is to reduce the entitlement to sick leave for those people who generally are people who need sick leave the most."

"It also has an effect on people's workmates. If they go to work sick, then illness spreads. That's the point of sick leave - to keep workforces as healthy as possible."

McDonald said the "vast majority of employers" would be reasonable if an employee was sick.

"If you approach them and you've got an issue and you talk to them about it, I'm sure they'll look after you because good staff are hard to find, so they like to keep them. It's just this mandated 10 days a year is too much [for part-time workers]."

Mackintosh said the proposal ignored the fact the CTU, Business NZ and the government had been working together on a replacement for the Holidays Act.

"I think it's a false economy to deny people sick leave if they are sick. I mean, people only take sick leave if they're sick, and it is better to have people on low incomes having the security of knowing that they're not losing income and not spreading their germs at work."

Labour Party Deputy Leader Carmel Sepuloni and Labour Leader Chris Hipkins.

Carmel Sepuloni. Photo: RNZ / Angus Dreaver

Prime Minister Christopher Luxon last year said 10 days' sick leave "is what it is", had passed into law and would not be changed.

"Christopher Luxon had said to the nation that he was not going to change a sick leave entitlement," Labour deputy leader Carmel Sepuloni told RNZ's First Up.

"And then now we have the minister coming out publicly saying that she is looking to change it for part-time workers.

"We need people to stay home when they're sick. I mean, that is the health advice and that is what we know to be right. We certainly don't want to be going to work, or our kids going to school surrounded by other people who are sick, and then we end up getting sick as well. So it is another broken promise."

Luxon - speaking from Fiji as part of his first trip to the Pacific as prime minister - rejected the suggestion it was a broken promise.

"Not at all, what that's about is the minister for workplace relations in our government has quite rightly - and we've identified this very early on because it's been a major issue for a number of businesses across New Zealand for a number of years now - is to go out and consult on the Holidays Act.

He said sick leave was just one part of the consultation.

"It's known and has been known for a very long period of time to be a very complicated and complex piece of legislation ... there's quite a lot of complication around calculation of payments that just genuinely needs a review."

"There's many parts to the Holidays Act, but, as I've said before, my position remains."

Sepuloni said Labour planned to review the act, but did not get to it before being voted out of office last year. She said the act did need a review, being complicated for businesses, but not in a way that "undercut the entitlements that already exist" for employees.

Labour workplace relations spokesperson Camilla Belich said it was a "real surprise" to hear van Velden's plans, which went against Luxon's promise last year (Van Velden is an ACT MP, not National).

She told Morning Report part-time workers were already entitled to less sick leave than full-time.

"If you work four hours a day, then you will get four hours for your sick day, so they already are proportional. Businesses are already paying less for their part-time workers to take sick leave than they would for an equivalent full-time worker."

She said not everyone used their 10 days' leave, nor was it an entitlement that had to be paid out if they were not used.

As for people abusing sick leave, Belich said it might happen "at the margins", and there were disciplinary processes employers could use if their employees were faking it.

She said Labour would be open to an accrual system, as long as it did not reduce workers' current entitlements.

"All we've had is an announcement that we'll get further documentation in September, so it's really difficult to be able to say for sure exactly where we'd stand."

Minister responds

Van Velden, appearing on RNZ's Midday Report on Thursday, defended claims the proposed change would hit Pasifika, Māori, women and people with disabilities the hardest, considering those groups were more likely to be working part-time.

"I'm not looking at any particular race or gender when I'm creating these laws. What I'm looking at is what is good practise for our economy and what will work for workers.

"If we're looking at particular groups and saying people will be better or worse off, I think we need to look at how we create a flexible working arrangement that works to allow people to get into those jobs and for businesses to employ with confidence."

She said it was time "ask the question of proportionality" and whether it was fair a part-time worker was entitled to 10 sick days a year, considering they might have more than one job, each with 10 days' entitlement.

"What we've been hearing loud and clear is that there's been huge frustration within the business community, especially who have been doing it really tough since Covid. The previous government added more and more costs to doing business… we are asking that question of, is it proportional to have part-time workers and full-time workers having the same entitlements?"

Asked if she had heard from healthcare workers and teachers on the front line of Covid-19, van Velden said "all elements of our society are intertwined".

"We do have to have a step back and look at, how do we ensure that our employment laws work for workers and they work for business?"